The birth of this generation launched new directions in society. That is surely to continue as baby boomers age amid the loss of wealth from the recession, though the effects are hard to predict.

When boomers exchange their bigger houses for smaller ones, house prices may fall even more than they already have, helping younger Americans to use their own savings more productively and generating more wealth. When boomers leave the workforce, wages for younger people may rise, pressuring supply to keep up with demand. Retirees may support younger generations — just as the homemakers who stayed out of the workforce half a century ago contributed to the economy with their unpaid labor — by baby-sitting their grandchildren, freeing mothers to work and perhaps encouraging a higher fertility rate. Instead of selling their homes, boomers may invite younger generations to come live with them.

The crisis is real. But members of the baby boom generation have never settled for simply responding to reality; instead, they have shaped their own reality. They will continue to do so in the next decades, fashioning solutions in real life that policymakers can't devise in advance on paper.

Nicole Gelinas is a City Journal contributing editor and a fellow at the Manhattan Institute. This piece is adapted from the fall issue of City Journal.